Money

A condo owner at 163-165 Prospect Park West in Park Slope says someone at the building’s management company allegedly embezzled the building’s reserve fund. Our tipster sent along this letter from the company, Guardian Property Management of Brooklyn. It reveals that “money may have been misappropriated from certain accounts which it [Guardian] maintains on behalf of its clients.”

Apparently Guardian is looking into the theft, and so is the Brooklyn District Attorney’s office, according to our tipster. When we contacted the D.A.’s office, a spokeswoman said she could neither confirm nor deny Guardian was under investigation.

“There are at least eight other buildings under Guardian management in Brooklyn that also had their funds wiped out, I am told — perhaps even more,” the tipster added. He said that roughly $100,000 had been stolen from his building alone.

The building has 25 apartments. Guardian’s attorney did not return our calls for comment. Click through to see the letter from the management company.

Earlier this week WNET’s Metro Focus ran a fun post checking in with four council members on the participatory budget system, which allows citizens to suggest how their tax dollars – approximately $1 million per district – should be spent, and then vote on said ideas. Council Member Brad Lander (pictured, representing CB6 territory) and Council Member Jumaane D. Williams (representing Flatbush, parts of Canarsie and Midwood) shared some of the best, and weirdest, suggestions for the borough so far. They include a community center in Kensington, wi-fi in all public parks, a roller skating rink, more dumpster pools and a recording studio/youth center. Our favorite: the “Gwondola,” a Gowanus-based gondola system. Never hurts to dream! Proposals are now being considered by volunteer committees and will be voted on this spring.Checking In on NYC’s Participatory Budgeting Project [Meto Focus]

Con Edison got the nod from two state judges yesterday to jack prices on their residential service starting April 1. While the hike wasn’t quite as much as the utility had originally asked for, it is expected to result in an increase of about $8 per month for the average home owner. All told, Con Ed should reap an extra $632 million. It’s not a done deal yet: One more vote is needed from the Public Service Commission.

The Times has a piece today entitled “Housing Bill Has Something for Nearly Everyone” that talks about how the multi-billion (how much exactly? no one knows) housing bailout bill isn’t just pitched at people with mortgage woes and troubled lenders. Aspects of the bill will probably have modest benefits for New York-area borrowers who don’t have mortgage trouble. The bill, for example, is supposed to help first-time buyers, who’ll be eligible for a federal tax credit of $7,500 or 10 percent of the home purchase price (whichever’s smaller). The catches: single people earning $95,000 or more, or married couples earning $170,000 or more aren’t eligible for the credit. Another break comes for people who take standard deductions on their taxes: They’ll be eligible for an additional tax deduction of $500, or $1,000 for married couples. The aspect of the bill that might have the most impact on pricey New York is the one that allows Fannie Mae or Freddie Mac to buy bigger loans (none over $625,500, however) in areas with higher housing costs, a measure that’s aimed at lowering interest rates for people who take big loans.Housing Bill Has Something for Nearly Everyone [NY Times]Photo by Rikx

By now you’ve probably read the Times article about negotiating for a home by sending a letter explaining a lowball offer; it’s been one of the top e-mailed stories on the paper’s web site for a couple days. In it, Rob Lieber drafts sample letters from both the buyer’s and seller’s sides. Apparently, epistolary haggling is all the rage nowadays in places where the market’s tanked. Here’s part of the pretend buyer’s letter:

Dear Seller:

I’m writing to let you know that I would like to make a bid on your property. I love the area and am committed to buying a house nearby. And your home fits my needs. But given that my offer is well below your asking price, I also feel I owe you an explanation. First, consider the big picture. Nationwide, home prices in the first quarter of 2008 fell 14.1 percent compared with the same period a year earlier, according to the Standard & Poor’s/Case-Shiller U.S. National Home Price Index. That’s the biggest decline in the 20-year history of the data. And just in case you’re wondering, during the housing downturn of the early 1990s, the decline was never worse than 2.8 percent. Not only that, earlier this month, the National Association of Realtors pointed to the huge number of existing homes on the market. As of the end of April, the total number was 4.55 million. At the rate people are buying right now, that represents an 11.2-month supply. So buyers have options right now. A lot of them. I’m no different. Your home is great, but it isn’t unique…

Yesterday Gov. Spitzer introduced his $124.3 billion budget for the fiscal year that begins in April, a plan that calls for a spending increase of 5 percent as well as various cost-cutting measures meant to address the state’s estimated $4.4 billion budget deficit. So what sort of impact will the governor’s plan have on real estate? For starters, one of the most significant aspects of the budget involves increasing the real estate transfer tax, which is paid on property purchases above $175,000. Spitzer is also proposing a freeze on spending for the $4.7 billion School Tax Relief program, which uses state money to lower property taxes by funding school districts and giving rebate checks to homeowners. At the same time, Spitzer is looking to increase spending on affordable housing via the new $400 million Housing Opportunity Fund, which will go to the creation and preservation of low-cost and supportive housing. Some independent budget analysts say Spitzer’s plan doesn’t go far enough in terms of curbing spending. Nevertheless, the uncertain economic climate was clearly weighing on the governor. Like every other state in the nation, New York is feeling the effects of a serious economic downturn, requiring us to make tough decisions necessary to continue moving our state in the right direction, Spitzer wrote in a statement accompanying the budget.Spitzer Plans Cuts and Fees to Close Deficit of $4.4 Billion [NY Times]Spitzer’s Budget Triggers Backlash [NY Sun]2008-2009 Executive Budget [NY State]Photo from state.ny.us

The large yearly gains in the city’s property values appear to be a thing of the past. The Finance Dept. estimates that city property values rose only 1.44 percent in 2007, a big drop after six years of double-digit increases (in 2006, for example, there was an 18 percent gain). The smaller increase in values is being attributed to declining values in small homes outside of Manhattan. The growth in real estate values over the last several years has helped buoy the city’s economy and contributed to record budget surpluses. The lower assessments may force the city to make increases in the tax rate or end the $400 property tax rebate, according to David Weprin, chairman of the City Council Finance Committee. This is an indicator that we might be up for some tough fiscal times, and Wall Street isn’t helping, either, Weprin told the Times. Property values are no longer going up; they’ve stabilized, and I would expect that’s the trend we’ll see before they go down.Gains in NYC Property Values Start to Flatten Out [NY Times]Home Values Drop, But Taxes Go Up [NY Post]Growth in Property Market Value Slows [NY Sun]Photo by crown heist.

Someone on the Forum who’s about to close on his first home is looking for advice:

The condo is a condo conversion that was gut renovated and essentially considered new construction with an offering plan. We are first-time buyers and I have heard alot of people say that sellers/developers may try to screw you at the closing. Since this is a pretty broad statement, just wondering in what ways I could pontentially get “Screwed” and if anyone has any advice or experiences they would be willing to share.

One person says it’s possible for sellers to adopt a “take it or leave it” stance if the buyer notices anything in the home that’s amiss, while another says that having a real estate lawyer accompany you to the closing should prevent problems. Anyone out there been burned by a closing or heard stories about how other people have gotten gypped?Getting Screwed at Closing [Forum]Photo by thorscipher_mason.

We buttonholed a few folks this week on the streets of Park Slope and asked whether they knew anyone who’d been affected by the mortgage crisis. While no one reported trouble close to home, plenty thought it might be looming just ’round the corner…

I don’t know anybody who’s been affected, but I’ll probably see some in the coming months. Houses around here are so expensive that I don’t know how you can buy without a heavy mortgage.Kyle; lives in Park Slope.
Not really, but I know mostly young people who’ve recently bought and people who’ve owned their houses for many years. I assume I’ll start seeing more people affected by it. Part of it might be, though, that it’s not something that people readily talk about.Julia; lives in Fort Greene.
No. I certainly can’t imagine anyone I know having trouble with a mortgage, because I don’t know anyone in New York who can afford a mortgage–let alone be in trouble for it.Steve; lives in Williamsburg.
No. I don’t really know anything about it.Tiffany; lives in Park Slope.

The suffocating embrace of the subprime crisis is definitely starting to take the wind out of the city’s residential deals. Mortgage brokers say they’re seeing a pronounced uptick in the number of buyers who are backing out of deals because they can’t get mortgages at competitive interest rates. Hardest hit are borrowers who don’t have excellent credit histories, or who expected to take out large mortgages and then pay them down with bonuses. A number of brokers say they’re seeing plenty of prospective buyers who didn’t lock in rates and who can’t close on the units because they can’t afford higher-than-expected monthly payments. And these are borrowers who aren’t necessarily on financially shaky groundâ€”a sobering article in today’s Times documents some of the effects of too-lenient lending practices geared towards lower-income earners. Large swaths of working-class enclaves in the boroughs, like parts of central Brooklyn, have turned into new-development ghost towns because of predatory lending practices and concomitant rising foreclosure rates. So it’s becoming clear that the mortgage industry crisis is now affecting the city’s haves and have-nots. Anyone had a deal scuttled recently?Frustrated New Yorkers Grapple With Loan Rates [NY Times]Risky Loans Help Build Ghost Town of New Homes [NY Times]Photo by D.B. Blas